International court slaps down Ecuador for fraud in Chevron Shakedown

Jazz ShawPosted at 11:31 am on September 8, 2018

It’s been a while since we heard from Steven Donziger and his merry band of Ecuadorean and U.S. environmentalist allies who attempted to pick the pockets of Chevron for nearly ten billion dollars. After their series of stunning defeats in both American and Canadian courts, confirming claims of fraud and racketeering, you might think they’d have been done. Not so. Ecuador was still attempting to press their claim under international law, resulting in the dispute winding up in the lap of the Permanent Court of Arbitration in The Hague. By this point, it may come as no surprise to learn that Team Ecuador didn’t do any better there than they have in any other legal venues. The tribunal found that the plaintiffs have no valid claim to seek payment in the fraudulent case in any nation. (Businesswire)

An international tribunal administered by the Permanent Court of Arbitration in The Hague has issued an award in favor of Chevron (NYSE: CVX) and its indirect subsidiary, Texaco Petroleum Company (TexPet), finding that the Republic of Ecuador violated its obligations under international treaties, investment agreements and international law. The tribunal unanimously held that a $9.5 billion judgment rendered against Chevron in Lago Agrio, Ecuador, in 2011 was procured through fraud, bribery and corruption and was based on claims that had been already settled and released by the Republic of Ecuador years earlier. The tribunal concluded that the fraudulent Ecuadorian judgment “violates international public policy” and “should not be recognised or enforced by the courts of other States.”

One of the more interesting aspects of this hearing is the fact that the court was presented with documents dating back to the mid-90s when TexPet was originally pulling out of the country. At that time, the company (later taken over by Chevron) had a clear deal with the government of Ecuador stating what their responsibilities were in terms of environmental requirements and cleaning up the work sites. It was shown that they invested $40M in “environmental remediation” and that the government of Ecuador signed off on the results of those efforts. They produced sworn testimony from Ecuadorian officials saying TexPet’s “technical work and environmental work was done well.”

At the same time, records indicated that Ecuador’s own national oil company had done virtually nothing to clean up environmental damage from their own drilling sites. That pattern had gone on for decades. All of that history was washed from the record in Ecuador when they decided to try to sue Chevron, failing spectacularly in the process.

As for Donziger himself, things haven’t been going any better. This summer he was suspended from practicing law in New York. There are also many investment groups who dumped money into this legal battle in exchange for a share of the riches they thought they would extract from Chevron. Those investors have since largely signed over their interests to the energy company and will not be seeing any return on their investments. This can’t be doing much for the plaintiff’s reputation both at home and abroad.

It’s impossible to say for sure, but after many years of playing out in courts around the world, the story of the Chevron Shakedown may finally be at an end. Or at least we can hope so.